New York, September 30, 2005 - Total lending climbed 10% from 3Q04 levels to $341 billion on the back of investment grade issuance that popped to $158 billion, according to Loan Pricing Corporation, a Reuters Company, the leading provider of loan market information globally.

Rarely does the investment grade sector capture the lending "story" of a quarter. But, net new issuance in this arena soared 80% over 3Q04 to approach $50 billion, buoyed considerably by a $24 billion deal for Procter & Gamble. But there also was investment grade M&A, the odd Homeland Reinvestment Act loan and a flurry of improving companies that refinanced in the investment grade market.

Banks continue to compete aggressively for investment grade loans, meaning that loan tenors are longer than LPC has ever tracked, and loan margins have experienced a considerable drop since the 2002 crunch: Undrawn spreads have tightened by more than 32% to less than 13 bps, while fully drawn spreads have dropped a whopping 45 bps (or 40%). In fact, according to the Loan Pricing Corporation's analytics, undrawn spreads are coming close to their 1997 nadir. Moreover, this may not be about to end: In LPC's quarter end survey, an increasing number of lenders say that investment grade spread pressure - thought to have eased last quarter - is back again.

In contrast to the increase in high grade activity, leveraged lending slipped. Relative to the year-earlier period, issuance fell 15% to $106 billion. Meanwhile, institutional issuance (loans sold to non-bank investors) is down 18%. But those downdrafts belie good news: What really went away were opportunistic refinancings, wherein borrowers simply refinance and reduce the spread on their existing loans. Net new institutional issuance eked up 1.5% last quarter, despite a very quiet August. Meanwhile, leveraged M&A and LBO activity continued to be strong, posting $37.5 billion and $19 billion respectively. (Look for a near-record LBO year).

Competition for leveraged loan assets remain strong, and loan margins remain near their historical lows. Looking forward, roughly 80% of the respondents to LPC's quarter-end survey say spreads will remain the same or fall further in the remainder of the year.

Rank	Bank Holding Company	Volume	# of deals	Market Share
1	J.P. Morgan	$89,682,500,000	206	26%
2	Citigroup	68,451,726,278	85	20
3	Bank of America	64,368,596,783	211	19
4	Wachovia Securities	18,917,534,000	75	6
5	Deutsche Bank	9,583,450,000	13	3
6	Barclays Bank Plc	6,540,000,000	11	2
7	Wells Fargo & Co.	5,235,000,000	36	2
8	Lehman Brothers	5,196,750,000	16	2
9	SunTrust Bank	5,125,000,000	9	2
10	Merrill Lynch & Co.	4,996,205,500	21	1

Rank	Bank Holding Company	Volume	# of deals	Market Share
1	Bank of America	$21,969,178,750	104	21%
2	J.P. Morgan	18,487,550,000	72	18
3	Citigroup	12,271,091,408	29	12
4	Wachovia Securities	5,685,229,000	32	5
5	Deutsche Bank	5,608,450,000	11	5
6	Merrill Lynch & Co.	4,056,205,500	19	4
7	GE Capital Corp.	3,800,250,000	24	4
8	Lehman Brothers	3,371,750,000	13	3
9	Credit Suisse First Boston	2,781,800,000	16	3
10	UBS AG	2,541,569,875	14	2

About Loan Pricing Corporation
Since 1985 Loan Pricing Corporation (LPC) (www.loanpricing.com), a Reuters Company, has provided market players around the world with the most complete and accurate news, data and analytics on the loan and credit markets. LPC's coverage spans the U.S., Europe, Middle East, Africa, Latin America, Japan and Asia-Pacific via subsidiary Basis Point Publishing Limited. LPC's content is delivered via publications, on-line services and databases.

LPC is the premier global provider of credit market information and analysis as a result of its in-depth focus on the credit industry and development of state-of-the-art products and services for bankers, borrowers and investors. For more information, visit the company website at www.loanpricing.com

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